Kakao expanding taxi services amid Tada's crisis

Kakao T Blue taxi service operated by Kakao Mobility / Courtesy of Kakao Mobility

By Jun Ji-hye

Kakao has been aggressively expanding its taxi-related business and becoming the sole leader among new platform companies at a time when rental van-hailing service Tada is facing a crisis following the prosecution's indictment of the heads of its operator.

Kakao Mobility has acquired five taxi companies and is close to taking over a sixth in a bid to develop and expand its new mobility services.

Through the acquisition, Kakao Mobility, a Kakao subsidiary set up last year to expand and monetize transportation services, has secured about 500 taxi-driving licenses, with the number expected to increase to about 600 when the takeover of the sixth company is completed.

Kakao's takeover of the taxi companies followed the Ministry of Land, Infrastructure and Transport's announcement of new regulations designed to settle the conflict between conventional taxi services and new platform companies.

The current situation shows that the IT company's work to develop its new mobility services while resolving disputes with taxi drivers has been well advanced.

The company has also increased its investment into the taxi companies it acquired.

On Wednesday, Kakao Mobility announced an investment of 23.2 billion won ($20 million) into TJ Partners, a special purpose company it set up to operate the taxi companies. This followed the investment of 20 billion won in September.

Based on the taxi-driving licenses it has secured, Kakao Mobility is moving to expand its Kakao T Blue business, mid-size “rejection-free” taxi services.

The company is also planning to release the Kakao T Venti service, featuring larger vehicles such as Hyundai Motor's Starex and Kia Motors' Carnival.

“We have acquired taxi companies in a bid to test the effects of integration between information technologies and conventional taxis,” a Kakao Mobility official said.

Kakao's aggressive moves are in stark contrast to VCNC, the operator of Tada.

Tada's ride-hailing service operated by VCNC / Captured from VCNC website

VCNC, a subsidiary of car-sharing service SoCar, has encountered a crisis, which could lead to suspension of its business, after prosecutors indicted VCNC CEO Park Jae-uk and SoCar CEO Lee Jae-woong without detention, Oct. 28, declaring the app-based business “illegal.”

Launched in October last year, the Tada service, which uses 11-seat rental Kia Carnival vehicles and outsourced drivers, has expanded its presence swiftly over the past year, boasting over 1.25 million users.

But VCNC has failed to overcome the conflict with taxi drivers, and to make matters worse, its heads will face a trial on charges of running an unlicensed transportation business.

“An increasing number of people want more convenient services amid the advent of new technologies,” a VCNC official said. “We will be well prepared for the trial and expect a court to make a new judgment.”